How the Construction Industry Is Affected by the Gig Economy

How the Construction Industry Is Affected by the Gig Economy

Construction isn’t the first industry that springs to mind when most people think about the gig economy. Programming, writing, graphic design, food delivery, and transportation are all certainly associated with this new economic model. However, gig economy contract labor has traditionally been just as much of an essential for the construction industry as hammers, nails, or contractor bonds.

In fact, 17.2 percent of all gig workers are currently employed in construction and the trades. Independent and temporary labor is a long-running feature of the construction industry. Construction contractors have been hiring day laborers for decades, and positions in the skilled trades have also often been filled via independent labor.

As one of the cornerstone sectors of the U.S. economy, the construction industry can tell us a lot about the new interactions between labor and technology that characterize today’s workforce. With significant amounts of the industry’s labor force already employed on a project basis, the industry is ripe for transformation through the digital gig economy—so let’s look at the trends that will drive that transformation.

The State of Construction and the Gig Economy

Construction employers most frequently use the gig economy to recruit lower-level laborers. This has often taken the form of informal hiring practices through channels such as word of mouth, social media, Craigslist, and even off-the-street hiring in front of chain hardware stores like Home Depot and Lowes.

However, highly skilled workers such as expert carpenters, plumbers, and electricians are also in high demand in the gig economy. Individuals in these trades often work as self-employed freelancers, particularly in states without unions for skilled trades.

The biggest difference between the construction gig economy and other sectors of the gig economy is that, as of yet, no single platform or technological model has revolutionized the construction labor market. Construction labor doesn’t have an Uber or Lyft that provides an easy-to-use single-portal solution for the gig economy. However, the gig economy has already demonstrated a lot of value to the industry even without such a platform.

Benefits of the Gig Economy in the Construction Industry

The construction industry has seen a chronic labor shortage for most of the 2010s. Anything that gives construction contractors more options for hiring qualified labor has the potential to make the industry substantially more efficient and reduce project costs.

Many workers and employers alike love the flexibility and freedom that the gig economy provides. Millennials are often drawn to gig work for this reason and, with the industry’s known difficulty in recruiting younger workers, many contractors are glad for the help.

The gig economy also benefits workers in skilled trades who want to enter the marketplace independently. These expert professionals are able to set their own prices for services and negotiate their own terms through gig work. This can also benefit the employer, as gig workers know that they have to perform well if they want to continue to secure work.

Hiring construction gig workers is also a great way for contractors to run lean and reduce overhead costs. The costs and person-hours associated with a formal interviewing and recruiting process can consume a great deal of resources, which makes gig economy labor a potential game-changer for cost control. However, the redefinition of the employee-employer relationship comes with some tradeoffs that are important to be aware of.

Drawbacks of the Gig Economy in the Construction Industry

The lack of HR oversight and accountability is a recurring problem in the gig economy. Some unscrupulous contractors use the gig economy to minimize their liability and excuse themselves from giving workers the protections that they deserve. Migrant workers have often been among the chief victims of these exploitative employers. As the technology of the gig economy continues to evolve, responsible employers and tech companies will have to work together to ensure that there’s no room in the industry for unethical and exploitative companies.

Employers will also need to continue to vet gig workers as carefully as they do traditional employees. It’s important to ensure that gig workers can get along with everyone on the job site and that they’re committed to doing high-quality work, no matter their employment source. Since gig workers and employers don’t typically have the opportunity to build long-term relationships the way they would traditionally, mutual trust can be more challenging to create.

Aside from labor relations issues, the biggest disconnect between the construction industry and the gig economy is the relatively unevolved nature of the technology. Without well-regulated platforms for gig economy labor found everywhere, the construction gig economy remains relatively disconnected, and continuity and accountability are difficult to create—but hopes are high that future technologies will be able to solve these issues.

The Future of the Gig Economy in Construction

What should we look for in the construction gig economy marketplaces of the future? What features should the construction industry demand in the platforms that will shape its 21st-century labor economy?

Here are some directions that the new technologies of the construction gig economy will need to pursue, as well as some issues that will need to be addressed:

  • The ability to hire both skilled and unskilled labor as quickly as possible without compromising the quality of personnel
  • A system for verifying skills and certifications
  • Review functions that enable employers to rate the performance of workers and (just as importantly) workers to rate employers
  • Protections for gig workers (particularly migrant workers) that help prevent exploitation by unscrupulous contractors
  • Integration with on-demand transportation platforms
  • Options for workers who don’t have smartphones, such as receiving job notifications via phone call or text
  • Integration with contractor bonds and other safeguards to ensure that gig workers comply with state laws, licensing rules and any subcontractors are paid on time and in full

The gig economy continues to revolutionize nearly every labor market, and the construction industry is currently ahead of the curve in terms of the widespread adoption of gig labor. It remains to be seen how the introduction of new technologies will change construction labor. However, as with most industries that are still awaiting revolutionary labor technologies, it’s less a matter of “if” than “when.”

This is a guest post from Surety Bonds Direct.

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